System and method for competitive pricing and procurement of customized goods and services

ABSTRACT

An apparatus and method for selecting a vendor for a customized good or service, including receiving vendor attributes from the vendors and receiving invitation-for-bid data from the buyer defining a custom job. The invitation-for-bid-data is received through a web browser and is compared to the vendor&#39;s attributes based on at least one selection criterion to generate a vendor selection pool of vendors qualified to bid on the job. Vendors in the vendor selection pool receive a vendor&#39;s invitation-for-bid. A bid is received from at least one vendor. The lowest price bid is identified, the buyer is informed of the identity of the selected vendor, and solicited for approval of the selected vendor. Upon receipt of approval from the buyer, an order is issued to the selected vendor. The non-selected vendors in the selection pool are informed of the bid prices and of the selection results.

CROSS-REFERENCE TO RELATED APPLICATIONS

This is a continuation application of U.S. application Ser. No.12/855,423, filed on Aug. 12, 2010, which is a continuation of U.S.application Ser. No. 12/268,285, filed on Nov. 10, 2008, now U.S. Pat.No. 7,788,143, which is a continuation of application Ser. No.09/450,023, filed on Nov. 29, 1999, now U.S. Pat. No. 7,451,106, whichclaims the benefit of U.S. Provisional Application No. 60/110,248, filedon Nov. 30, 1998.

FIELD OF THE INVENTION

The present invention generally relates to an apparatus and method forcreating a database representing pools of vendors of customized goodsand services for one or more subscribing buyers, and for selecting thelowest bidder from the database's represented vendor pool on a per-jobbasis and, more particularly, for (i) creating and maintaining adatabase representing a vendor base or pool for each subscribing buyerof customized goods and services, the database further representingcapabilities of said vendors, (ii) receiving solicitation datacontaining production specifications and related contracting terms andvendor qualification criteria from buyers, (iii) extracting vendorqualification criteria data from said solicitation data, (iv)transmitting invitations to bid on said solicitations to qualified onesof said vendors, based on said vendor qualification criteria data, and(v) selecting from among the responding vendors based on the responseprice and other factors.

BACKGROUND OF THE INVENTION

Customized goods and services, such as print and other types ofdigitally mastered information product goods (e.g. CDs and DVDs) andservices, differ from non-custom manufactured goods or services in thatsuch goods and services are generally not pre-stocked as “off-the-shelf”items but, instead, must be specifically manufactured or provided tomeet the buyer's particular requirements. Consequently, customized goodsand services cannot simply be purchased “off-the-shelf” at fixed pricesappearing on standard price lists. Instead, their prices are establishedwhen the exact goods or services are actually specified, either bysingle or multiple order(s), invitation-for-bid (“IFB”),request-for-quote (“RFQ”), or request-for-proposal (“RFP”); only thencan the manufacturer or service provider assess the precise quality andmanufacturing or service specifications required to perform the job.

The general procedure used in the prior art of procurement of customizedgoods and services is that the buyer provides the actual solicitation toone or more vendors with whom, in general, the buyer has had sufficientprevious experience or recommendation to know what type of product orlevel of service can be provided. For purposes of this description theterm “vendor”, unless further qualified or clearly having a differentmeaning readily apparent from the context, means an entity in the marketfor providing customized goods and services and, unless specified, doesnot require that the entity being qualified meets any criteria orpreference. Similarly, for purposes of this description, the terms“solicitation” or “solicitations” shall mean, individually orcollectively, an order, IFB, RFQ, or RFP, while the terms “quote” or“bid” shall be used interchangeably and mean any type of pricing orother response from a vendor to an order, IFB, RFQ, or RFP.

After receiving the solicitation, the vendor reviews the buyer's productmanufacturing and delivery specifications and requirements that arestated therein, including but not limited to physical specifications,characteristics of style, quantities, mode of shipment, deliveryschedule, and quality level required to perform individual jobs orestimated job requirements over a given period of time. Then based onits previous experience in producing or providing the requested goods orservices, the vendor provides an estimated price quote or bid to thebuyer. Generally, the buyer will provide the solicitation to a single orvery limited number of vendors, and either (1) award the contract to thesingle or lowest bidder; (2) award the contract to a vendor whosequality or working relationship is preferred if that preferred vendor'squote or bid is sufficiently low; or (3) “shop” the lowest quote or bidto other vendors to determine if they are willing to match or underbidthe initial low quote or bid.

In following this general procedure in the prior art, however, buyers ofcustomized goods or services confront the so-called “iron triangle” ofquality, timeliness, and cost. Buyers want a product or service that isgood, fast, and cheap, but what they discover is that traditionalprocurements methods will, at best, only achieve two of these threegoals on any given job. Thus, a buyer might demand and receive topquality on a “rush” order, but only at a high cost. Conversely,negotiating a lower price may achieve cost savings, but also compromisequality and timeliness.

This problem is heightened by great elasticity in the so-called “market”price of many customized goods or services, which can vary widely fromvendor to vendor and from week to week. This elasticity results from thefact that pricing of such customized goods or services greatly dependson (1) the level of service and quality desired; (2) the labor andequipment required to produce the job or provide the service; (3) theamount time involved in producing the job or providing the service; (4)whether the job or service can be engineered, designed, or furnished ina cost-effective way; and (5) whether the customer order can be includedin the vendor's production schedule, while still complying with therequired delivery date.

This last factor is particularly crucial when the vendors are“hard-iron” manufacturers or service providers with high overhead andlabor costs, such as suppliers of print and information products. In thecase of such vendors, idle equipment and labor can be devastating totheir profit margins. At the same time, such vendors must be ready toservice their regular customers on short notice, which means planningfor downtime in the production schedule to ensure that their machineryis available for “rush” orders. Because of the limitations oftraditional procurement methods, vendors are often left not only withunscheduled holes in their production schedules, but also unable to filldowntime purposefully set aside for last minute “rush” orders fromregular customers. Managing customer job orders in a way that minimizesthese “holes” in the production schedule is frequently whatdistinguishes the profitable vendor from the insolvent one.

As a result of this tension between the cost of idle equipment and laborand the need to preserve downtime for regular customers, vendors areconstantly seeking short-turnaround jobs to fill their production“holes” when their regular orders do not materialize. To obtain theseshort-turnaround jobs, many vendors will resort to extremely lowpricing, provided that they can do so without losing the goodwill oftheir regular customers. This pricing strategy is called “contributionpricing” because it involves bidding for work at below normal profitmargins knowing that any income above out-of-pocket costs will still“contribute” 100% to the vendor's bottom line in comparison to the costof letting its labor and machinery remain idle. In current printingmarkets, for example, “contribution” pricing on a regular basis is foundin federal and state government procurements of customized print goods.

Contribution pricing occurs in the public sector because federal andstate agencies are often required by law to make bid opportunitiesavailable to large numbers of vendors in order to obtain “full and opencompetition.” Where government agencies are further required to awardcontracts to the lowest responsive and responsible bidder, procurementsof customized goods typically result in poor quality control andrelatively high administrative costs that must be subsidized by thetaxpayer. In contrast, traditional procurement methods and prior artdevices in the private sector have emphasized quality control bylimiting the vendor pool for customized goods and services to a smallnumber of reliable vendors with whom the buyer has previously donebusiness.

There is a significant cost problem, however, associated with limitingthe vendor pool to a small number of suppliers. Lacking the disciplineof a more competitive market, vendors who know that they are biddingagainst limited competition will offer and charge higher prices. Priorart methods attempt to address this problem of non-competitive pricingin one of two ways: (1) longer term contracts with preferred vendors inestablished commercial relationships that lump procurements togetherover an extended contract period in the hope of enhancing the buyer'spurchasing power and thereby obtaining controlled term pricing; and (2)“best buy” or “best value” procurement practices that award jobs basedon factors other than price and which are largely creative user or,quality control driven. Such alternative prior art methods are now beingadopted increasingly in the public sector due precisely to qualityissues arising from “full and open competition.”

In both public and private sector customized product and servicemarkets, however, traditional procurement methods and prior art deviceshave failed to solve the “iron triangle” because of their inability totake advantage of “contribution” pricing without incurring prohibitiveadministrative costs or sacrificing quality or timeliness. There areseveral key reasons for this failure.

First, in order to find the manufacturer or service provider who iswilling to offer the lowest “contribution” pricing on any given job, thebuyer must often request price quotations from a larger vendor pool thanthey are prepared or equipped to manage efficiently. A larger vendorpool would, in theory, be desirable because it usually means that alower price quote or bid can be received. This is well-known in thegeneral business world. In the actual business environment, however,identifying such a large vendor pool is generally not practical. Themain reason is that gathering and maintaining information about a largenumber of current and potential vendors is time consuming and expensive.Few companies have the time, money, or inclination to maintain a large,up-to-date database on such potential vendors, particularly whensoliciting dozens of quotes or bids can itself require staff andadministrative time that costs more than the savings generated fromreceiving a greater number of competitive bids. This disparity isheightened by the fact that many customized goods or services involverelatively low dollar purchases or procurements, which is often thecase, for example, with printing jobs.

Second, even if a buyer were willing to absorb the administrative costsassociated with establishing, maintaining, and managing a large databaseof vendors to improve the competitiveness of their bidding, the buyer isoften reluctant to do so because quality control becomes more difficultas the vendor pool increases. A crucial aspect of quality control isobtaining information about the performance record of vendors from whomthe buyer would like to solicit quotes or bids, particularly withrespect to the quality and dependability of goods and services output byeach vendor in the vendor pool. This is difficult not due only to thevolume and nature of the information required, but also to the fact thatthe buyer must generally obtain such information from its own dealingswith the vendor. In such circumstances, the reliability, price history,and quality of a vendor's work for other buyers may not be obtainable.As a result, buyers are reluctant to seek goods or services from newvendors because negative information on their reliability or quality maythen have to be learned firsthand.

This problem is made more acute by the fact that the procurement ofcustomized goods and services frequently requires specialized knowledgeand expertise in finding the right vendor for each job. Most businesseshire purchasing officials with general procurement knowledge who arethen given responsibility for a wide range of purchases. As a result,the purchasing official is ill-equipped to manage large numbers ofcustomized procurements efficiently and without loss of control over theproduction of individual jobs. Instead, the purchasing official isforced to rely on the vendor's expertise in designing or engineering ajob, which often results in a more expensive (and more profitable forthe vendor) design, engineering, or production process.

Third, even if the buyer is willing to make the financial investmentnecessary to hire procurement personnel with the administrativeexperience, staffing resources, and specialized product knowledge tomanage a large pool of vendor and monitor each job closely for qualitycontrol and contract compliance, the buyer has no guarantee that vendorswill offer contribution pricing. The reason is that even vendors whowould gain, in an immediate sense, from contribution pricing to fill aproduction hole are frequently unwilling to offer that pricing to theirregular customers. Such vendors are primarily concerned about losingtheir customers' goodwill when the vendor is unable or otherwise failsto offer contribution pricing on a repeat basis. After once receiving aquote or bid reflecting contribution pricing (e.g., due to idle machinetime at the vendor's production plant when the contract must beperformed), the regular customer would expect to pay the same low pricesfor all future jobs from that same vendor, even when the vendor lacksidle production capacity. The vendor is then faced with a Hobson'schoice of either risking the loss of the customer account by refusingthe less profitable job (thereby forfeiting the sales and marketingcosts previously incurred to obtain the customer account) or sufferingfinancial loss by displacing more profitable work to accept the regularcustomer's lower paying work.

As a consequence of the foregoing obstacles to overcoming the “irontriangle” of quality, timeliness, and cost, there has been a long feltneed for a system and method of competitive pricing for custom goods andservices that: (1) identifies and manages a vendor pool large enough toobtain the benefits of enhanced pricing competition, without imposinghigh administrative costs; (2) enables the buyer to procure from agreater number of vendors without causing a loss of quality control orcontract compliance; and (3) encourages vendors to offercontribution-level pricing on a consistent basis, while identifyingvendors willing to offer contribution pricing on any given job.

SUMMARY OF THE INVENTION

It is therefore an object of the present invention to provide a systemand method meeting the above-identified long-felt needs. The presentinvention meets these and other objectives by providing a system andmethod for matching and selecting a vendor meeting both general andjob-specific requirements specified by a buyer, from a plurality ofvendors, comprising, in one example embodiment, an apparatus and methodfor quantifying a set of buyer's attributes associated with at least onekind of customized good or service and quantifying a set of vendor'sattributes associated with the manufacturing, production, or providercapabilities corresponding to each of a plurality of vendors. Theexample embodiment further comprises means and method steps forcomparing the set of quantified buyer's attributes to each quantifiedset of vendor's attributes corresponding to each of the plurality ofvendors, the comparison being in accordance with a buyer definedselection criteria and generating, as a result of the comparison, a dataset representing a vendor selection pool for the particular buyer. Inaddition, the example embodiment comprises means and method steps forreceiving a data representing a buyer's invitation for bid tomanufacture, produce, and/or provide at least one manufactured item orcustomized service and for submitting a corresponding data to each ofthe vendors represented by the data in the vendor selection pool. Thedescribed example embodiment further comprises means and method stepsfor receiving a bid data, having a field representing a bid price (whichmay be based on alternative specifications suggested by the respondingvendor), from each vendor in the vendor selection pool that submits abid data, for identifying the received bid data having the lowest bidprice, and for transmitting a data to the buyer representing theidentity of the identified vendor and notifying the buyer to transmit adata representing a approval or disapproval of the identified vendor. Inaddition, the described example embodiment includes means and methodsteps for receiving an approval data from the buyer and, in response toreceipt, for generating and transmitting an order to the selected vendorfor the purchase of at least one manufactured item or customized serviceat the bid price, and for transmitting or otherwise releasing a data toall vendors in the selection pool, informing each of the identity of theselected vendor and the rank order value of the bids submitted by allother selection pool vendors.

A further described embodiment of the invention implements the receptionof buyer attribute data and vendor attribute data by a web siteaccessible through the Internet. According to this embodiment, a website includes a graphical user interface through which potential vendorsare asked to input information characterizing their products andservices, their manufacturing capability, and other attribute data.Similarly, the web site has a graphical user interface accessible tobuyers, for entering solicitation data and other information, includingpreferred vendors and standard or optional vendor selection criteria.

A further embodiment of the invention includes means and method stepsfor maintaining multiple vendor pools for each of a plurality of buyers,the multiple vendor pools for a particular buyer corresponding tomultiple product or service types that the buyer procures.

A still further embodiment of the invention transmits and/or releasesdata representing the bid price of all received bids, to all vendors whosubmitted bids or received solicitations.

A still further embodiment of the invention automatically generates aset of project milestone data, in reverse scheduling format, for use inmonitoring the winning vendor's progress on the buyer's requestedmanufactured item or customized service.

A still further embodiment of the invention has means and method stepsfor receiving an invoice data from the winning vendor upon completion ofthe job, and generating a corresponding invoice for the buyer'sapproval. In this embodiment, upon invoice approval, the system canprepare the invoice data for direct transmission to the buyer'saccounting system for (i) the proper allocation of costs associated withthe job within the buyer entity and (ii) the transfer of funds forpayment of the buyer-approved invoice from the buyer into a singleescrow account for subsequent transfer of the payment funds to thevendor. This embodiment provides a single source accounting feature forbuyers dealing with a plurality of vendors regardless of the type of feecharged for using the invention.

A still further embodiment of the invention has means and method stepsfor allocating a service, user, access, licensing, or similar fee forusing the invention to each job transaction. For purposes of thisdescription, such fee shall be referred to as a “job transaction fee.”In this embodiment, the system receives an invoice data from the winningvendor upon completion of the job, and generates for the buyer'sapproval a corresponding invoice that, in addition to the invoicepayment data from the winning vendor, includes the job transaction feeassociated with the individual job. Upon invoice approval and thetransfer of funds indicated on the buyer-approved invoice into an escrowaccount, the system can then allocate and distribute such funds bytransmitting the job transaction fee included on the buyer-approvedinvoice to a system administration account and transmitting theremainder of such funds to the winning vendor.

BRIEF DESCRIPTION OF THE DRAWINGS

The features and advantages of the present invention will be more fullydescribed by the following detailed description of the preferredembodiment of the invention, which is to be considered together with theaccompanying drawings wherein like numbers refer to like parts andfurther wherein:

FIGS. 1A and 1B show a typical communications system and arrangement ofan example embodiment of the invention, and a flow chart of the systemoperation;

FIGS. 1C and 1D show flow charts of example embodiments of the invoicingand payments procedures associated with the system operation;

FIG. 2A shows an Internet-based arrangement of the system of FIGS. 1Aand 1B;

FIG. 2B shows a more detailed example embodiment of an arrangement ofthe system's web servers and database servers shown generally on FIG. 2Aat Block 621;

FIGS. 3-14 show screen displays used in connection with a specificembodiment of a print procurement application of the present invention;and

FIG. 15 shows a general embodiment of the communications system of FIG.1A.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

The method and apparatus of the present invention will be betterunderstood by the description below of its operation in reference to theattached figures. It is to be understood, though, that the presentinvention is not limited to the example embodiments and arrangementsdescribed herein, but that it also comprises any modifications orequivalents within the scope of the claims.

FIGS. 1A and 1B set forth a first example embodiment of the presentinvention. Referring to FIG. 1A, a system database 2, which is residenton the data storage (not shown) associated with a conventional generalpurpose programmable computer (not shown), is connected to the Internetvia a web site 4 resident on a conventional web server (not shown). In apreferred embodiment of the invention the buyer(s) 6 and the pluralityof vendors 8 each access the web site 4 through respective Internetbrowsers such as, for example, Netscape or Internet Explorer. An exampleof such an arrangement is shown at FIG. 2A. It should be noted that theactual physical location of the computer(s) on which the web site 4resides, and of the computer(s) (not shown) which perform the operationsdescribed below on the database 2 contents, and of the buyers' computersand the vendors' computers (not shown) are not prescribed by thisinvention. For example, the conventional general purpose programmablecomputer on which the database 2 resides may be co-located with, or canbe located remote from the conventional web server (not shown) hostingthe web site 4. Further, the database 2 may be resident on the computer(not shown) of the buyer 6, in which case the buyer 6 would access thedatabase 2, through a web browser or equivalent means, or the database 2would automatically access the buyer's computer and download thedatabase contents.

This specific embodiment shown on FIG. 2A is particularly suitable forhigh-speed communications with a plurality of users operating inparallel. The system is illustrated with a functional diagram showngenerally at 610. In this illustration, a plurality of entities havingprojects to be bid upon 613 are each individually connected to a commoncommunication network such as the Internet 614. Potential bidders orproduct/service vendors 615 are similarly connected to the commoncommunication network 614. This high-volume bid processing system shownat 621 is similarly connected to the common communication network 614.This high-volume bid processing system thus has access to communicationwith a large number of system users. This high-volume bid processingsystem is illustrated in greater detail below with reference to FIG. 2B.

As shown in FIG. 2B, an example embodiment of the high-volume bidprocessing system is shown generally at 710. In this example embodiment,one or more robust, high-capacity telecommunications lines 712, whichfor example may be T1 lines, provide access to the communication network614, which as noted in the preferred embodiment is the Internet. The T1lines are directly connected to one or more web server units 714. Theseweb server units are capable of handling a plurality of transmission andreception operations simultaneously. The web server units also handlepublication and transfer of the various web pages used with the systemto the various system users that are connected through the Internet. Theinterconnection between the T1 lines and web servers is a conventionalconnection that may be scaled for increased volume. Specifically,additional T1 lines or web server units may be added as necessary tosatisfy increases in user demand.

The web server units are connected to a pair of database servers 716that are mirrored. The database servers 716 handle transfer and storageof all vendor and bid data used by the system as noted above. Thedatabase servers 716 are mirrored as generally known in the art in orderto prevent degradation of system performance should one of the databaseservers cease to function properly. It will be appreciated that thisparticular embodiment of the system provides all of the users with readyaccess to information and a very simple and straightforward means forexchanging data. Extra database servers may also be added as needed inorder to satisfy user demand.

Referring back to FIG. 1A, block 10 represents the entry by the vendors8 of a set of vendor's attributes VATTR, each VATTR representing thename, geographical location and the manufacturing, production, and/orprovider capabilities and other attributes of the one of the vendors 8submitting it, which are quantified and entered into the system databaseby the vendors by way of the web site 4.

An example device for storing the system database containing the VATTRinformation is an Internet server running under Windows NT 4.0, with MSInternet Information Server 4.0, Oracle Database 7.3.4.0, and aninformation server using standard “.dll” files created in any of thestandard programming languages known in the art, e.g., Delphi, MS VisualBasic, or C++, Java, all running on a conventional general purposecomputer hardware, such as a PC compatible Eisa/Is a HAL (486 CStepping) equipment or the like. An example of a specific embodiment,showing the graphical user interface, is described later in thisspecification in reference to FIGS. 3-14.

It should be noted that the entering of the vendors' attributes VATTRmay also be performed via a manual entry of the information into thesystem database 2 and may also occur after a vendor has been acceptedinto a buyer's vendor base and begun bidding on jobs, for example, toreflect changes in the vendor's production capabilities or jobpreferences.

Referring to FIG. 1A at block 12, after receipt of a set of vendorattributes VATTR from a plurality of vendors 8, a buyer 6 inputs, by wayof the web site 4, an invitation-for-bid data BIFBD, defining acustomized good or service in terms of standardized buyer job attributesBATTR. The invitation-for-bid data BIFBD also defines any standard oroptional selection criteria SC by which a vendor will be selected fromamong the plurality of vendors 8 and any additional vendors that thebuyer 6 adds to the plurality of vendors 8 as part of theinvitation-for-bid data BIFBD, as described below. Theinvitation-for-bid data BIFBD are quantified and entered by the buyer 6in accordance with standard graphical user interface (GUI) promptsappearing on the particular display of the web site 4, an example ofwhich is described in reference to FIGS. 3-14 below. Theinvitation-for-bid BIFBD defines the customized goods or servicesaccording to quantified values of standardized attributes so that eachvendor 8 will understand what exact manufactured item or customizedservice is being placed out for bids by the buyer 6. This arrangementensures that the bids are comparable and that mistakes as to therequirements of the buyer are minimized.

FIG. 1A, block 14 illustrates the step of retrieving all of the vendorattribute sets VATTR from the database 2 and comparing each to the jobattributes BATTR derived from the invitation-for-bid data BIFBD based onthe standard selection criteria SC (such as product category and qualitylevel) previously entered by the buyer 6 as part of the job attributesBATTR. The comparison determines which of the vendors 8 are qualified toprovide the requested customized goods or services. The comparison atblock 14 also uses any optional selection criteria SC which the buyer 6had entered as part of the job attributes BATTR (such as geographicallocation of the vendor, whether the vendor must be a union shop,small-disadvantaged business, or a minority- or women-owned business),and includes the names of specific vendors entered by the buyer 6 aspart of the invitation-for-bid data BIFBD that the buyer wished to begiven the opportunity, or not be given the opportunity, to bid on thejob. Based on the results of the block 14 comparison a vendor selectionpool VPOOL is created, and the formatted vendors' invitation-for-bidVIFB is then transmitted at block 16, via web site portal access,e-mail, or equivalent means, to each of the vendors represented by thevendor pool VPOOL.

Referring to FIG. 1B, at block 18 all of the vendors 8 in the vendorselection pool VPOOL of FIG. 1A that received the invitation-for-bidVIFB can submit, through the web site 4, a responding bid RBID(i), where“i” is an index or name value identifying the submitting vendor, havingthe ith vendor's fixed price quote or bid to manufacture, produce,and/or provide a manufactured item or customized service in accordancewith the specifications designated by the buyer in itsinvitation-for-bid VIFB or alternative specifications requested orotherwise recommended by the submitting vendor. Each responding bidRBID(i) is stored in the database 2 in a responding bid file RFILE.Prior to award of the job, which is described below, only the buyer 6has access to the RFILE, as shown at block 20. The buyer 6 can accessRFILE through the web site 4, or through direct read of the database 2,if the database 2 is resident on the computer system (not shown) of thebuyer 6. The RFILE list is preferably presented to the buyer 6 in rankorder according to the bid price.

Referring again to FIG. 1B, at blocks 22 and 24 after the time of bidclosing, the lowest price bid is identified as a system defaultselection and a WINBID information is transmitted or otherwise providedto the buyer 6 which: (i) identifies the lowest bidding vendor, and (ii)solicits the buyer for approval to accept bid RBID of the lowest biddingvendor. The buyer 6 then approves the lowest bidding vendor or overridesthe default selection and approves another responding bidder (forexample, based on a higher bid associated with alternative jobspecifications), in either case by visiting the web site 4 and inputtingan APPROVAL data through its web site portal workspace, or bytransmitting the data via e-mail or equivalent means to the computer.Upon receipt of the APPROVAL from the buyer 6 an ORDER is issued atblock 26 to the winning vendor for the purchase of the customized goodsor services specified by the invitation-for-bid VIFB (including anyalternative specifications accepted by the buyer), at the price bid bythe winning vendor among the vendors 8. If, on the other hand, theAPPROVAL is not received, or if a corresponding data (not shown)indicating no approval is received, the process goes to block 28 bywhich the invitation-for-bid is cancelled or reissued (in which event,the process reverts to block 6). It should be noted that depending onthe particular design choice, and on the resolution of possible legalissues (such as the validity of digital signatures), a separateformality, such as a letter of acceptance or a phone discussion betweenthe buyer 6 and the winning vendor 8, may be used or required beforeactual award of the bid, or before the commencing of work on the job.For purposes of this description, though, receipt of APPROVAL issufficient. In the event that the separate formality is required, thiswould be carried out before moving to the block 30 described below.

After the ORDER is issued the system goes to block 30 which disseminatesvia web site portal access, e-mail, or equivalent means, a BIDINFO datato all of the vendors 8 in the vendor selection pool VPOOL who submittedbids, the BIDINFO data representing the identity of the selected vendorand the identity and rank order value of the bids submitted by all ofthe vendors 8. After the ORDER is transmitted at block 26, the systemmakes the BIDINFO data accessible by Internet portal to all vendors 8 inthe vendor selection pool VPOOL who did not submit bids in response tothe invitation-for-bid VIFB. Also after the ORDER is transmitted atblock 26, either concurrent with or before or after the BIDINFO istransmitted, the system goes to block 32 and generates a set of jobmilestones MSTONES, which are transmitted to the buyer 6, in reversescheduling format. The milestones MSTONES are calculated based on thebuyer's job attributes BATTR associated with the particular item(s) tobe manufactured or customized service(s) to be provided. The milestonesMSTONES are then entered into a database (not shown) that may beassociated with a general purpose programmable computer (not shown) ofthe buyer 6 which generates screen alerts, at block 34, on the winningvendor's web site portal workspace (not shown) at time points specifiedby the milestones MSTONES. The winning vendor 8 must then confirm on itsweb site portal workspace that the work requirements associated witheach milestone MSTONE have been completed as they have become due. Ifthe completion of each milestone MSTONE is not confirmed as they becomedue, then the system presumes that the milestone MSTONE was notcompleted when due and generates a screen alert, at block 36, on thebuyer's 6 web site portal workspace (not shown) that no confirmation ofthe completion of the milestone MSTONE has been received. The buyer 6 isthereby alerted (i) to check for any messages transmitted through thesystem from the winning vendor 8 to the buyer 6 explaining why themilestone MSTONE was not completed when due, or (ii) if no such messagewas transmitted, to contact the winning vendor 8 directly by telephone,e-mail, or equivalent means to determine if the job is on schedule ortake such steps as may be necessary if the job is not on schedule. Inany event, the winning vendor 8 proceeds to manufacture, produce, and/orprovide the buyer-required manufactured item or customized service, andthen to ship the manufactured item or provide the customized service asinstructed by buyer 6.

Referring to FIG. 1C, block 38, upon confirmation by the vendor 8 thatthe job has been completed, the system generates an automatic vendorpayment invoice that contains any approved contract modifications at thevendor's 8 web site portal workspace. Alternatively, the vendor paymentinvoice could be transmitted to the vendor 8 by other forms ofcommunication such as e-mail, facsimile, or equivalent means. In theembodiment using a web site portal, the vendor 8 confirms the vendorpayment invoice with a digital signature, at block 40, and the buyer 8is then alerted on its web site portal workspace, at block 42, that thevendor payment invoice is ready for review, approval, and payment, atblock 44, in accordance with the terms of the invitation-for-bid VIFB.For this embodiment, no fee for using the system is added to the vendorpayment invoice, and the vendor 8 receives payment directly from thebuyer 6, outside the system, at block 46 by electronic funds transfer(EFT) or physical means. An alternate embodiment for transmittingpayment to the vendor 8 through the system is set out in FIG. 1C atblock 48. For this embodiment, payment for all buyer 6 jobs is made byelectronic funds transfer (EFT) or physical means to a single escrowaccount, at block 48, managed by the system to provide the buyer withsingle source accounting. Payment is then made to the vendor 8 from theescrow account, at block 50, by electronic funds transfer (EFT) orphysical means.

A further alternate embodiment for invoice payment is set forth at FIG.1D. Referring to FIG. 1D, at blocks 52 and 54, a vendor payment invoiceis generated upon job completion and approved by the vendor 6, in thesame manner described above with respect to FIG. 1C, at blocks 38 and40. Prior to invoice approval by the buyer 6, at block 56, however, ajob transaction fee is added to the invoice as payment for the cost ofusing the system allocated for each job. Payment of the buyer-approvedinvoice, at block 58, is then made to the system's single source escrowaccount, at block 60, in the same manner described above with respect toFIG. 1C, at blocks 44 and 48. Upon receipt of funds into the escrowaccount, the system allocates and distributes the job transaction fee toa system administration account, at block 62, and payment for the job tothe vendor 8, at block 64. Transfer of these funds to the systemadministration account and the vendor 8 is made by electronic fundstransfer (EFT) or physical means in the same manner as described abovewith respect to FIG. 1C, at block 50.

The invention and its operation are described above without limitationto specific application. Example applications include customized printedgoods, digitally mastered CDs or DVDs, machine tools, furniture,engraved wares, and insurance, in which jobs are awarded on acompetitive or “bid” basis.

Referring to FIGS. 3-14, an example of the present invention applied toprint procurement will be described. It will be readily understood toone of ordinary skill in the art, however, that the print procurementexample is only an example application of the system and method of thepresent invention, and that the present invention can be applied toother types of competitive bidding on customized goods and services. Thefunction of this example embodiment is to match a printing vendor, thesebeing a specific example of the above-described vendors 8, to a printjob based on requirements input by the print buyer, which is a specificexample of the above-described buyer 6.

For this description it is assumed that the vendor attributes VATTRdescribed in reference to FIGS. 1A and 1B, a set from each of aplurality of print vendors 8, have already been entered into thedatabase 2, at the direction and with the consent of the print buyer 6and that no additional vendors are added as part of theinvitation-for-bid data BIFBD. The print vendors 8 enter theirrespective vendor attributes VATTR by visiting the web site 4 and usingthe vendor's web browser (not shown), e.g., Netscape, in a mode andmanner substantially identical to the process described below by whichthe print buyer 6 enters the buyer attributes BATTR describing theparticular print job for which bids will be requested. Alternatively,the print vendors 8 can transmit their respective vendor attributesVATTR to the print buyer 6 by e-mail or equivalent means for entry bythe print buyers 6 or any authorized third party.

Referring to FIGS. 1A, 1B, and FIG. 2A, the print buyer 6 begins itsinteraction with the system by logging onto the system web site 4 usinga Netscape or equivalent browser. The web site 4 and the buyer's 6browser 12 are also referenced herein as the buyer's “quantificationmeans”. Referring to FIG. 1A, buyer 6 logs onto the web site 4 with aunique user name and password, thus ensuring that the data entered isunique to that user. Once logged in, print buyer 6 moves to his or herindividual web site portal workspace 72, and the first page of theworkspace is shown at FIG. 3. The buyer 6 then clicks on the FIG. 3hyperlink point labeled as “Create New”, using a suitable pointingdevice (e.g., a mouse, roller ball, track pad, or equivalent) to createa new print job. Upon clicking this hyperlink, print buyer 6 ispresented with a clear, easy-to-read form such as that shown at FIG. 4.Print buyer 6 has available to it a “back” button to go back to thehyperlink point from which any page is accessed. An example systemsupporting the particular example of the web site 4 represented by FIGS.3-14, is Windows NT 4.0, using MS Internet Information Server 4.0,Oracle Database 7.3.4.0, and an information server using standard “.dll”files created in any of the standard programming languages known in theart, e.g., Delphi, MS Visual Basic, C++, or Java, all running on aconventional general purpose computer hardware, such as, a PC compatibleEisa/Isa HAL (486 C Stepping) equipment or the like.

Referring to FIG. 4, it is seen that the field at the top of the screenis the master ID and description area 90. Within this field, print buyer6 may give a print job an identifier or name 92. A purchasinginstructions field 100 is shown arranged beneath the ID/description area90. Print buyer 6 utilizes the purchasing instructions field 100 toinform prospective print vendors 8 of any special instructions relatedto print job.

Referring to FIG. 5, the buyer 6 next inserts the item for which a bidis to be requested, or adds another item to an existing list, byclicking on a drop-down menu 110 whereupon a list of possible options115 is presented. The information entered through the screens of FIGS.5-14 is a specific example of the buyer attributes BATTR described inreference to FIGS. 1A and 1B above. Referring to FIG. 5, print buyer 6selects from the list of options 115 on the basis of the particular setof needs and requirements associated with the print job to bequantified. When print buyer 6 selects an option 115 that best matchesits printing needs, the “add item” button 120 is clicked, via thepointing device.

Clicking the add item button 120, moves the buyer to a new screen, shownat FIG. 6, requesting additional information more specific to the addeditem of the print job. If print buyer 6 inadvertently clicks the “additem” button 120 and selects an option that does not match its needs,the print buyer 6 may scroll to the bottom of the page and activate a“delete” button (not shown). Print buyer 6 will then be presented withthe previous FIG. 5, screen to introduce a correct job item.

Assuming that the “add item” button at FIG. 5, was clicked to correctlyselect “flat sheets”, the buyer 6 is presented with the example screenof FIG. 6 requesting entry into a “Master Job ID/Description” field 90,including a “job number” 92 and “job description” (not numbered). Theprint buyer 6 can also select the required job quality (not numbered)from the “quality” scroll down, which provides “none designated” as anoption, as depicted at FIG. 6. The FIG. 6 screen provides a “quantity”area 130 so that print buyer 6 may enter the total number of units to bemanufactured. For this example, print buyer 6 also supplies the “overrunpermitted” and/or “underrun permitted” as a percentage in fields 135.The FIG. 6 screen provides entry, at field 138, of additional “completeset(s) of film” and “film or plate ready disc(s)”.

After the data entry screen of FIG. 6 is completed, the buyer's browser,in this example of adding an order for “flat sheet”, moves to the webpage or screen depicted at FIG. 7. The FIG. 7 example screen includes aproof area 140 which allows print buyer 6 to enter information abouttypes of proofs 142 required and inspection requirements 144.

After completion of the example screen of FIG. 7, the buyer 6 ispresented with the example screen of FIG. 8. Near the top of the FIG. 8screen example is a “production contact” area 145 with a drop-down menuthat allows print buyer 6 to choose from a list of production contacts,an example being shown as item 150. For this example, the print buyer 6then moves down to the trim field 155 to define the width and type oftrimming operation required for the example flat sheet order. Thisportion of the FIG. 8 example screen is shown in greater detail at FIG.9. The detailed example screen of FIG. 9 includes a “stock” field 160for the print buyer 6 to enter the type of paper stock required for thejob, as well as a “color” 165, “manufacturer” 170, “grade” 175selections, “basis weight” 180 and “basis size” 185. In the particularexample screen detailed at FIG. 9, the print buyer 6 is provided with afield 188 allowing him or her to specify whether substitutes, such asrecycled paper, are allowed.

For this print procurement example, the buyer 6, after completing theFIG. 9 screen, is presented with the fields for entering the inkspecification data, by a screen such as that shown at FIG. 10. The FIG.10 example provides the print buyer 6 with a field 189 for the selectionof ink for front and back of the flat sheet, with a set of “radiobuttons” for entering “Coverage” as “Light”, “Medium” or “Heavy”, andwith a set of “yes” or “no” buttons specifying additional requirementsfor the materials and the process of manufacture.

Next, at FIG. 11, the print buyer 6 is guided through a series ofoptions related to the finishing of the flat sheet printed item. Eachfinish option 190 is associated with a small “pop-up” screen 195 thatacts as an assistant to guide the print buyer 6 through the process ofidentifying and specifying the specific finishing requirements. Eachpop-up assistant 195 provides print buyer 6 with choices of severaloptions specific to particular types of finishes. Referring to FIG. 12,a detailed view of an example “pop-up” screen 195 is presented to thebuyer 6, having a pull down menu of available stitching options. If thebuyer 6 clicks on the example highlighted at FIG. 12, which is “SaddleStitch”, he or she is presented with another “pop-up” screen such asthat shown at FIG. 13. FIG. 14 shows another finishing set of finishingoptions 195, defining the packaging requirements for the print job.Other attributes associated with a particular print job include binding,folding, perforations, scoring, punching, numbering, bar coding, andcollation.

Referring to FIGS. 1A and 1B, after the buyer 6 enters the data into theexample screens of FIGS. 3-14 describing the job, the buyer 6 clicks ona “submit invitation-for-bid” button on the screen (not shown) and, inresponse, the system generates the buyer's invitation-for-bid dataBIFBD, and the system commences the processing indicated at block 12.More specifically, the system receives the invitation-for-bid dataBIFBD, and extracts the buyer's attributes BATTR from the informationentered by the screens of FIGS. 3-14, and then compares those attributesto each of the plurality of sets of print vendor's attributes VATTR,using as the selection criteria SC for generating the vendor pool VPOOLthe standard selection criteria SC entered by the buyer 6 along with thebuyer's job attributes BATTR (such as product category and qualitylevel) and any additional optional selection criteria SC (such asgeographical limits or whether the vendor must be a union shop,small-disadvantaged business, or a minority- or women-owned business),specified by the buyer 6.

After the print vendor selection pool VPOOL is created by the system,the vendors' invitation-for-bid VIFB is submitted to each print vendortherein. The vendors' invitation-for-bid VIFB provides a specificationfor the printed item (e.g., paper focus, snap sets, envelopes, labels,rolled labels, magazines/booklets, etc.) presented in a faun that isderived from the quantified set of print buyer's job attributes BATTR sothat each print vendor 8 will understand the exact item or service isbeing placed out for bids by the print buyer 6. This arrangement ensuresthat the bids are comparable and that mistakes as to the requirements ofprint buyer 6 are minimized.

As described above with reference to FIG. 1B and the general embodimentof this invention, all of the print vendors 8 in the vendor selectionpool VPOOL of FIG. 1A that received the invitation-for-bid VIFB cansubmit, through the web site 4, a responding bid RBID(i) having thei.sup.th vendor's price quote or bid on the print job specified by VIFB.In this example embodiment for procuring print jobs, the responding bidsRBID do not contain any alternative specifications requested orotherwise recommending by the submitting vendors and are stored in thedatabase 2 in a responding bid file RFILE which is accessible by, orprovided to the print buyer 6, preferably presented to the print buyer 6in rank order according to the bid price. After the time of bid closingthe lowest price bid is identified as a system default selection and aWINBID information is transmitted or otherwise provided to the printbuyer 6 which: (i) identifies the lowest bidding vendor, and (ii)solicits the print buyer for approval to accept the bid RBID of thelowest bidding vendor. The print buyer 6 then approves the lowestbidding vendor or overrides the default selection and approves anotherresponding bidder, in either case by visiting the web site 4 andinputting an APPROVAL data through its web site portal workspace. Uponreceipt of the APPROVAL from the print buyer 6 an ORDER is issued atblock 26 to the selected print vendor by web site portal access, e-mail,or equivalent means to provide the printed goods or services specifiedby the invitation-for-bid, at the price bid by the winning vendor.

After the ORDER is issued the system goes to block 30 which transmits,via web site portal access, e-mail, or equivalent means, a BIDINFO datato all of the print vendors 8 in the vendor selection pool VPOOL whosubmitted bids, the BIDINFO data representing the identity of theselected print vendor and the identity and rank order value of theirbids. After the ORDER is transmitted, the system makes the BIDINFO dataaccessible by web site portal access to all vendors 8 in the vendorselection pool VPOOL who did not submit bids. Then, at block 32 a set ofjob milestones MSTONES are generated and transmitted to the print buyer6, in reverse scheduling format, based on the job attributes BATTRassociated with the particular print item(s) to be provided. As eachmilestone MSTONE becomes due (e.g. pick-up of buyer-furnished material,delivery of proofs, required press sheet inspections, partial andcomplete shipments of final product), an alert is generated, at block34, on the print vendor's web site portal workspace (not shown). Theprint vendor 8 must then confirm on its web site portal workspace thateach task associated with the alerted milestone MSTONE has beencompleted. If the completion of the alerted milestone MSTONE is notconfirmed by the print vendor 8, then the system generates a screenalert, at block 36, on the buyer's 6 web site portal workspace (notshown) that no confirmation of the completion of the milestone MSTONEhas been received. The buyer 6 is thereby alerted (i) to check thesystem for any messages from the print vendor 8 explaining why themilestone MSTONE was not completed when due, or (ii) if no such messagewas transmitted, to contact the print vendor 8 directly by telephone,e-mail, or equivalent means to determine if the job is on schedule ortake such steps as may be necessary if the job has been delayed. In thismanner, the system automatically tracks the job's progress until theprint vendor 8 completes the job by producing and/or providing thespecified print item(s) and ships them as specified by theinvitation-for-bid VIFB.

Upon completion the winning print vendor 8 confirms that the job hasbeen delivered, and the system generates an automatic invoice thatcontains any approved contract modifications at the vendor's web siteportal workspace. The winning vendor 8 confirms the invoice with adigital signature, and the buyer is then alerted on its web site portalworkspace that the invoice is ready for review, approval, and payment inaccordance with the terms of the invitation-for-bid VIFB. For thisexample embodiment, it is assumed that the buyer has chosen to pay a jobtransaction fee for use of the system with single source accounting forall of its solicited printed jobs. Referring to FIG. 1D, the jobtransaction fee is added to the vendor payment invoice shown on thebuyer's 6 web site portal workspace prior to the buyer's 6 approval, atblock 56. Payment of the buyer-approved invoice, at block 58, is thenmade to the system's single source escrow account, at block 60, byelectronic funds transfer (EFT) or physical means. Upon receipt of fundsinto the escrow account, the system allocates and distributes, again byelectronic funds transfer (EFT) or physical means, the job transactionfee to a system administration account, at block 62, and payment for thejob to the vendor 8, at block 64.

Those skilled in the art will appreciate that the specific embodimentsset forth above are for purposes of example only and the invention maybe practiced with a wide range of alternate structures. For example,referring to FIG. 15, the present invention contemplates alternativememory and processor structures and connections between thesestructures, using a generic external data link instead of the vendor webbrowser 10, buyer web browser 12, web site 4 and database 2 depicted atFIG. 1B.

As shown in FIG. 15, the database 2 of FIG. 1B may reside on a processor502 with access to a memory 504. The processor may be one associatedwith a personal computer or workstation, for example. The memory 504 maybe dedicated to the personal computer or workstation. However, thememory 504 may actually be comprised of one or more distinct memoryunits which may be, for example, random access memory (RAM), EEPROM,floppy disc drives or hard drives. In such an embodiment, these separatememory units are simply linked to the processor via a data bus or otherknown transmission link.

The memory 504 preferably receives data from an external data link 506.The data may be routed to the memory via the processor 502 or throughsome other data bus or other known transmission link. The external datalink 506 may be a connection via the Internet, through e-mail or someother alternate sources for data transfer. For example, the datatransfer represented could be accomplished by automated facsimilereception and downloading of data through optical character recognition,or through voice recognition-to-text. The data that is stored in thememory will typically include the request for bid data used in theclaimed process BIFB, the received bids RBID, as well as the vendor jobattributes VATTR.

Thus, in this alternate embodiment of the present invention, the biddata may be received in a variety of different formats for theconvenience of all system users. System users are thus not limited toaccess through a web interface. This facilitates a much simpler use ofthe system because users may phone in the required information; send itvia e-mail, or even by facsimile. Once a solicitation for bidinformation has been transmitted by the overall system operator, biddata may be received through the various forms of communications notedabove.

The bid data is then transferred and stored in the memory 504. As withthe previous embodiments, the processor then identifies the appropriatebid satisfying all the necessary requirements and which also has thelowest bid value. The ultimate selection information may be thentransmitted to each of the bidders or may be maintained in secrecy.

In yet a further advanced form of the system, a plurality of jobs may beprocessed simultaneously. In this regard, separate computer processorswith separate dedicated memory units may be associated with each ofseveral distinct jobs. Alternately, a single computer may receive biddata from a plurality of sources that are then categorized or tagged inthe memory for the respective jobs to be bid on. The processor will thenbe able to identify the lowest bid for a particular project once theclosing date and time has passed. This is accomplished by examiningstored bid data associated with a particular project based on thecategorization or further information tag.

It will be recognized by those skilled in the art that the embodimentdescribed above is compatible with the alternate communications devicespreviously described. Specifically, other computer systems that areprogrammed to send and receive data in other formats may also be linkedwith the database servers to provide more flexibility for the overallsystem. In that regard, computers that are dedicated to received vendorbid information or other data to be used by the system via facsimile,voice, or electronic mail may be linked directly with the databaseservers in order to transfer this information to the database serversautomatically. Any number of computers could be connected in this mannerto enable the system to automatically and simultaneously receive voice,facsimile, or electronic mail data and transfer this information to theappropriate file locations on the database servers. For example, in sucha version of the system, the vendor bid data could be received over theInternet or via any of the over communication media described above. Itis also contemplated that yet additional forms of communication may beused by the system in order to create yet greater flexibility for thesystem.

ADVANTAGES OF THE INVENTION

As can be readily determined by one of ordinary skill in the art ofprocuring customized goods and services, numerous advantages areobtained by employing the present invention. First, the inventionenables the buyer to manage a large vendor base without costlyadministrative burdens so that the buyer's purchasing personnel canfocus on budget planning, job preparation, internal customer serviceneeds, production quality, and contract compliance.

The invention accomplishes this goal, initially, by quantifying both thebuyer's procurement needs and the vendors' attributes in a databasesystem that matches objective product specifications with pre-determinedvendor quality levels and manufacturing, production, or providercapabilities for each approved vendor.

The buyer sets the parameters for both vendor pool selection and thebidding and award process so that vendor quality and responsibility canbe determined at the time each buyer's vendor base is established. Inthis manner the system eliminates time-consuming assessments of thequality or capability of each bidder each time an individual job issolicited. At the same time, the invention obviates the need to makejudgments about the responsiveness of the bids after they have beensubmitted. Significantly, the invention is not a posting system. Ratherit is a procurement system in which the buyer can create and manage asingle pool of vendors who are given specific production category andquality level ratings that, together with other selection criteria,automatically designate which solicitations each vendor in the pool canreceive and bid.

Moreover, the specification writing and bidding and award processes arestandardized so as to make the preparation and dissemination ofsolicitations, the receipt of quotes or bids, and the award of the jobto the lowest responsive and responsible bidder virtually automatic andwithout the need for additional procurement staff or the expenditure ofrelated out-of pocket administrative costs typically associated withcomparing or evaluating a multitude of vendor bids.

In addition, the process of monitoring production is enhanced andsimplified by the embodiment of the invention that automatically createsa detailed set of production milestones in reverse schedule format.These production milestones then become the focal point for an ongoingdialogue prompted by automatic system alerts about the job's progressamong the buyer's procurement personnel, the buyer's end-users or otherconstituent elements, and each participating vendor, using the system'snetwork of web site portal communication links.

Yet another embodiment of the invention provides a single sourceaccounting method for buyers dealing with a plurality of vendors, whileallocating fees associated with using the system to each individual job,which further simplifies and lowers the cost of the administrativeprocess. This embodiment receives an invoice data from the winning printvendor upon completion of the job and generates, for the buyer'sapproval, a corresponding invoice at the buyer's web site portalworkspace that adds a job transaction fee to the payment amountrequested by the vendor. Upon approval, the system can prepare theinvoice data for direct transmission to the buyer's accounting systemfor proper allocation of costs within the buyer entity and theelectronic transfer of funds from the buyer based on the buyer-approvedinvoice into a single escrow account that serves as the accounts payabledestination for all of the buyer's vendor payments. The system can thenallocate and distribute the deposited amount by transmitting the jobtransaction fee to a system administration account, and transmitting theremainder from the escrow account to the winning vendor.

Second, the invention has many built-in features that help ensurequality control and contract compliance. The emphasis on quality controlbegins at the pre-qualification stage when vendor pools are established,rather than at the time of job award. This emphasis is underscored bythe vendor's knowledge that poor quality or untimely delivery may resultin the vendor being removed from the buyer's vendor base and theinability to bid on that buyer's future jobs.

Quality control is further enhanced by the buyer's use of theinvention's specification-writing features to create precise detailedproduction specifications that objectively define the buyer'smanufacturing and quality expectations. The comprehensive, easy-to-usecomputerized specification writing tools associated with the invention,in effect, free the buyer from dependency on the vendor's specializedproduct knowledge. As a result, the buyer is now able to procure basedon objective specifications that reflect the buyer's requirements ratherthan one particular vendor's existing backlog, manufacturing,production, or provider preferences.

Similarly, the automatic post-award production milestones, reversescheduling, and job management communication aspects of the inventionenable the buyer's procurement personnel to monitor the productionprocess efficiently at any time and from any computer station withInternet access. This feature ensures that potential manufacturing ordelivery problems can be addressed early, thereby enhancing qualitycontrol and contract compliance.

Third, the invention creates a unique type of enhanced competitivebidding that virtually guarantees the submission of numerous bidscontaining contribution-level pricing for each and every job. Byfurnishing the buyer with easy, efficient Internet-based tools to createspecifications, disseminate solicitations, and receive and evaluate bidsfrom some or all of a potentially large number of pre-qualified andbuyer-approved vendors, the invention makes it more cost effective tosolicit competitive bidding on all jobs, including the type ofshort-term, small-dollar jobs best-suited to fill production holes andgenerate contribution pricing.

Moreover, once approved for a buyer's base of pre-qualified vendors, theinvention enables the vendor to obtain individual jobs without having toexpend additional costs on sales or marketing. These savings in salescommissions and marketing costs can then be passed onto the buyer, whilethe vendor is assured access to future bidding opportunities that matchthe vendor's quantified quality level and/or manufacturing, production,or provider capabilities. This assured access not only furnishes thevendor with bidding opportunities on the type of short-term work mostlikely to generate “contribution” pricing, but also allows the vendor tobid high, low, or not at all without fear of undermining the buyer'sgoodwill or compromising the vendor's opportunities to bid future jobs.

Knowing beforehand that the award will routinely go to the lowestresponsive and responsible bidder, each participating vendor will alsohave an incentive to submit their lowest bid upfront, rather than holdback their lowest bid in the expectation that the buyer will “shop” thebid around or otherwise engage in post-bid opening price negotiations.Similarly, having the ability to review a complete set of detailedobjective specifications before bidding, the vendor no longer will needto build pricing cushions into its bids in order offset unforeseenproduction expenses. Instead, vendors can calculate their bids moreprecisely and hence more competitively, at the time of submission.

Lastly, the invention offers an additional feature whereby, at the solediscretion of the buyer, all received bids can be released after awardto all vendors who were invited to respond. In this manner, theinvention allows the buyer to take advantage of an inherent “ratchetingdown” effect as each vendor learns how low the price range is likely tobe on similar jobs in the future. These factors taken together virtuallyassure the buyer of receiving “contribution pricing” from numerousresponding vendors on each and every job.

In sum, by harnessing Internet technology to handle all five major stepsor operations of an electronic commerce system for procuring customizedgoods and services-viz., (1) vendor base selection and management; (2)job estimating, specification writing, review, and approval; (3)solicitation distribution, bidding, and award; (4) job productionmanagement, quality control, and contract compliance; and (5) invoicing,payment, and cost allocation—the buyer can create and manage largemultiple vendor pools to obtain the benefits of competitive biddingbased on contribution pricing, while enhancing administrativeproductivity, production quality, and contract compliance. In this way,the invention enables the buyer to overcome the limitations of prior artsystems and methods in escaping the “iron triangle” of quality,timeliness, and cost.

It is to be understood that the present invention is described above inreference to specific embodiments which are for purposes of exampleonly, and that the invention is not limited to the specific arrangement,order of processing, or hardware for carrying out the steps as describedabove or shown in the drawings, but also comprises the variousmodifications readily apparent to one skilled in the art upon readingthis specification, as defined by the broadest scope of the appendedclaims.

The invention claimed is:
 1. A system comprising one or morenon-transitory computer readable medium containing computer-readableinstructions executable on one or more computer processors that areoperatively connected to the computer readable medium to perform amethod for facilitating selection of a vendor of customized goods orservices by a buyer or agent of the buyer in a transaction with theselected vendor, the method comprising the steps of: processing at leastone electronic communication including vendor data used in establishinga plurality of vendor records stored in at least one database, thevendor records corresponding to each of a plurality of vendors andhaving vendor capability data identifying a plurality of capabilities ofeach vendor for providing a customized good or service, where thecustomized good or service is produced or performed after the selectionof the vendor; processing at least one electronic communicationincluding vendor pool information identifying a plurality of vendorswhich are selected for inclusion in one or more vendor pools associatedwith one or more buyers for receiving a job solicitation, and storingelectronic data in at least one database that identifies each vendorpool by identifying, for each vendor pool, one or more buyers associatedwith that vendor pool; processing at least one electronic communicationincluding job information associated with a buyer after the vendorrecords and the buyer's vendor pool have been established, the jobinformation including job descriptor data which specifies a plurality ofcharacteristics of the customized good or service for a job on which thebuyer or agent of the buyer seeks to receive a bid; automaticallycomparing via a computer processor the vendor records to the jobinformation, wherein at least one of the plurality of characteristicsfor the customized good or service is designated as selection criteriaand compared with a corresponding vendor capability from the pluralityof capabilities for the vendors from the buyer's vendor pool;automatically identifying via a computer processor one or more subsetsfrom the buyer's vendor pool as qualified for receiving the jobsolicitation, based on said comparison; thereafter transmitting the jobsolicitation to one or more selected members from at least one of theidentified subsets of the buyer's vendor pool; receiving and processinga bid response from at least one of the vendors which received the jobsolicitation, the bid response including bid response data identifying abid price for the job from a corresponding vendor; and outputting to thebuyer or agent of the buyer an electronic communication providing thebid response data from at least one of the bid responses.
 2. The systemaccording to claim 1, wherein the designated selection criterionincludes a product category.
 3. The system according to claim 2, whereina further designated selection criterion includes at least one of aquality level, geographic location, an ownership characteristic, and aunion status.
 4. The system according to claim 2, wherein a vendor nameis further designated as a selection criterion.
 5. The system accordingto claim 1 further comprising steps of: ranking said bid response dataaccording to the bid price.
 6. The system according to claim 1 furthercomprising steps of: ranking said bid response data according to bidprice; and publishing ranked bid response data.
 7. The system accordingto claim 1 further comprising steps of: ranking said bid response dataaccording to bid price; and publishing information to other vendorsidentifying a selected vendor and a rank order value of said bidresponse data.
 8. The system according to claim 1, wherein said vendorcapability data represents a vendor's capability to manufacture orperform each of a plurality of different types of customized goods orservices.
 9. The system according to claim 1, wherein a status of avendor in the vendor pool associated with the buyer is not altered as aresult of a bid or failure to bid of the vendor.
 10. The systemaccording to claim 1, wherein an award is made only to a lowest bidder.11. A system comprising one or more non-transitory computer readablemedium containing computer-readable instructions executable on one ormore computer processors that are operatively connected to the computerreadable medium to perform a method for facilitating selection of avendor of customized goods or services by a buyer or agent of the buyerin a transaction with the selected vendor, the method comprising thesteps of: processing at least one electronic communication includingvendor data used in establishing a plurality of vendor records stored inat least one database, the vendor records corresponding to each of aplurality of vendors and having vendor capability data identifying aplurality of capabilities of each vendor for providing a customized goodor service, where the customized good or service is produced orperformed after the selection of the vendor; processing at least oneelectronic communication enabling one or more of the vendors from theplurality of vendors to participate in a vendor pool associated with abuyer for receiving a job solicitation; processing at least oneelectronic communication including job information associated with abuyer after the vendor records and the buyer's vendor pool have beenestablished, the job information including a job descriptor data whichspecifies a plurality of characteristics of the customized good orservice for a job on which the buyer or agent of the buyer seeks toreceive a bid; automatically comparing via a computer processor thevendor records to the job information, wherein at least one of theplurality of characteristics for the customized good or service isdesignated as selection criteria and compared with a correspondingvendor capability from the plurality of capabilities for the vendorsfrom the buyer's vendor pool; automatically identifying via a computerprocessor one or more subsets from the buyer's vendor pool as qualifiedfor receiving the job solicitation, based on said comparison; thereaftertransmitting the job solicitation to one or more selected members fromat least one of the identified subsets of the buyer's vendor pool;receiving and processing a bid response from at least one of the vendorswhich received the job solicitation, the bid response including bidresponse data identifying a bid price for the job from a correspondingvendor; and outputting to the buyer or agent of the buyer an electroniccommunication providing the bid response data from at least one of thebid responses.
 12. The system according to claim 11, wherein thedesignated selection criterion includes a product category.
 13. Thesystem according to claim 12, wherein a further designated selectioncriterion includes at least one of a quality level, geographic location,an ownership characteristic, and a union status.
 14. The systemaccording to claim 12, wherein a vendor name is further designated as aselection criterion.
 15. The system according to claim 11 furthercomprising steps of: ranking said bid response data according to the bidprice.
 16. The system according to claim 11 further comprising steps of:ranking said bid response data according to bid price; and publishingranked bid response data.
 17. The system according to claim 11 furthercomprising steps of: ranking said bid response data according to bidprice; and publishing information to other vendors identifying aselected vendor and a rank order value of said bid response data. 18.The system according to claim 11, wherein said vendor capability datarepresents a vendor's capability to manufacture or perform each of aplurality of different types of customized goods or services.
 19. Thesystem according to claim 11, wherein a status of a vendor in the vendorpool associated with the buyer is not altered as a result of a bid orfailure to bid of the vendor.
 20. The system according to claim 11,wherein an award is made only to a lowest bidder.